New York Forex Report: JPY Intraday Reversal

New York Forex Report: JPY Intraday Reversal

New York Forex Report: Markets have turned somewhat sanguine regarding the BoJ and their additional stimulus measures targeting the Yield curve, while abandoning the monetary base targets in the near term. In his press conference the Bank of Japan Govenor Kuroda sought to assure markets that there remained adequate room for further easing which would be implemented as needed, however as Kuroda was speaking the JPY reversed losses on the release of the statement and has since gone positive on the day. FX market appears a little bemused with the decision and has left the JPY decidedly mixed against its G10 peers. The USD is lower overall as trading has essentially entered a holding pattern with attention turning to Washington and the Fed’s decision this afternoon. Given low expectations around the outcome today, a “hawkish hold” message, which will firm up our expectation of a tightening in December, is perhaps the biggest risk for the markets. Expect trading to remain quiet ahead of the Fed.

FX Majors: EUR Weak inflationary pressures in Germany, in the form of producer prices, also weighed on the euro. The decline in price growth continued, slowing to -1.6% on the year but unexpectedly contracting on the month by -0.1%. GBP fell to a one-month low overnight as EU leaders have hardened their speech over the consequences for Britain of leaving the bloc. Sterling was the worst performer among its G10 peers after Czech State Secretary for EU Affairs Tomas Prouza said that the UK has “zero chance” of clinching an exit deal with both immigration curbs and free-market access. He is the latest in a string of central and eastern European leaders to issue such warnings to Britain in the hope of maintaining their citizens’ ability to work in the country . JPY has initially rallied 1% in response to the policy announcement as Japanese bank stocks (TOPIX banks index) have rallied 7% pushing the 1.5% Nikkei higher.

EURUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: The breach below 1.1190 has produced the anticipated 1.1120 test, a failure of bid support here opens a retest of the base at 1.1050, near term symmetry swing resistance is sited at 1.1230.
Retail Sentiment: Bullish
Trading Take-away: Short

GBPUSD
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: Failure below 1.3130 suggests early reversal to downtrend. As 1.3150 rejects corrective advances bears target 1.2870 as the next downside objective. Only a close over 1.3130 eases bearish pressure
Retail Sentiment: Bullish
Trading Take-away: Short

USDJPY
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: The break of 101.90 produced test of 101.20 which prompted sharp reversal. Near term resistance is sited at 102.80, only over 103.50 would ease near term bearish bias
Retail Sentiment: Neutral
Trading Take-away: Neutral

EURJPY
Outlook: Short Term (1-3 Days): Bearish – Medium Term (1-3 Weeks): Bearish

Technical: As 113.10 supports potential for another leg higher to target equidistant swing objective at 117.87. Failure below 113 opens move back to 112.
Retail Sentiment: Bullish
Trading Take-away: Short

Commodities FX: GOLD closed marginally higher for a second day on Tuesday, with prices confined to a tight range between $1312 to $1318 before closing at $1.65 (+0.12%) higher at $1314.84 per ounce. Oil prices recovered from six-week lows on Tuesday on hopes for a longer than expected output freeze to be reached at the informal OPEC meeting in Algeria next week. U.S WTI crude futures rose as much as 1.7% in U.S mid-day before easing off to only close 0.3% higher at $43.44 per barrel. AUD RBA has hinted at a stable outlook for interest rates having already cut twice this year, revealed by the RBA minutes released yesterday. The RBA left interest rates unchanged at 1.5 percent earlier this month, said the economy was growing at potential despite further falls in business investment. Financial markets imply around a one-in-three chance of another easing by year end, perhaps in November after the release of inflation figures for the third quarter. CAD was weakened on Tuesday as some investors trimmed their positions before two major central bank meetings. The USDCAD surged to 1.3242 and met resistant there, afterward the pair retreated below 1.3200 overnight. Traders are now waiting for the FOMC rate decision meeting due tonight while it is widely expected to hold interest rates unchanged at 0.25% to 0.50%.

AUDUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bearish

Technical: The next downside objective is symmetry swing support sited at .7412. Near term resistance is sited at .7560/80 a breach of this area opens a move to .7660.

Retail Sentiment: Neutral
Trading Take-away: Neutral

USDCAD
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: As 1.3030 supports 1.3372 is the equidistant AB=CD corrective objective, only below 1.2960 threatens near term bullish bias
Retail Sentiment: Bearish
Trading Take-away: Long

XAUUSD
Outlook: Short Term (1-3 Days): Bullish – Medium Term (1-3 Weeks): Bullish

Technical: 1301 AB=CD equidistant swing support has provided anticipated base. Near term resistance now at 1357, the break below 1320 opens move back to retest 1301 base. Only below 1300 concerns near term bullish bias.
Retail Sentiment: Bullish
Trading Take-away: Sidelines

USOIL
Outlook: Short Term (1-3 Days): Neutral – Medium Term (1-3 Weeks): Bearish

Technical: Equidistant swing resistance sited at 47.36 as this level rejected the corrective advance 41.81 becomes the downside objective over 47.50 targets retest of 48.90 potential double top.
Retail Sentiment: Bullish
Trading Take-away: Sidelines